Kuala Lumpur Composite Index: Rebound Expected

KLCI took a breather from the heavy sell down in the past few months. The 800 points support level is still not tested. On a month to month basis, the KLCI remained flat. After the rebound last month, the KLCI only managed to climb as high as 926.65 points on 5th November before settling at 838.28 points on 5th December. Investors were cautious in trading this month despite efforts made by governments all around the world to buffer the impact of recession. Recently, the market did not react strongly to the reduced interest rates of 25 basis points by the central bank.

Technically, KLCI remains in a strong down trend. The KLCI is below the declining short to long term moving averages. The resistance is now near resistance level, determined by the down trend line and mid-term 60-day average at 940 points. The divergence between support and resistance levels indicated by momentum indicators show that the KLCI is in a correction.


Daily KLCI chart as at 5 December 2008 using NextVIEW Advisor. Click on chart to view enlarged chart.

Investors are expected to remain cautious and from chart perspective, the KLCI should remain flat with a slightly upward bias and trade within the support and resistance levels of 800 to 940 points respectively. A rebound is expected because volume was heavy when the KLCI made a low in October.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

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